What is the legal argument for English or Northern Irish law constituting the appropriate legal system for determining if the deceased owned the property registered in his name given that the property is located in China?
If that legal issue is finally determined on the basis that the deceased had a beneficial interest in the property, UK inheritance tax would only be relevant if the deceased died domiciled in one of the constituent countries of the UK.
The two issues are separate and should not be conflated but as both must be satisfied it is practical to dispose definitively of either. Because demonstrating domicile on the facts could be in any given context difficult and uncertain without interaction ultimately with HMRC it may be easier in some cases to start with what the deceased owned and where it was located.
Where land is located outside the UK HMRC will (because ultimately the relevant UK court will) apply the law of the location to determine ownership (including that lawâs rules of private international law, which may operate renvoi). HMRC is very likely to accept the opinion of a suitably qualified local expert. It can instruct its own similar expert to challenge or confirm that opinion if it considers the action worthwhile. If the estate would be of such value that no IHT would be payable it may be pragmatic on instructions to concede either or both of domicile and ownership.
If I were faced with ascertaining the legal question of ownership of land according to the law of a country in which I was not personally expert I might ask my paralegal to research it but I would not expect to sign off on the basis of the results unless my clients were fully informed and instructed me to proceed on that basis alone, accepting all the consequences. These would include full disclosure to HMRC and the possibility that they might not accept the conclusion. I would be very concerned if that conclusion led to tax not being chargeable whereas it would be if the conclusion was different. In those circumstances if my clients were not prepared to instruct me to obtain expert opinion I would invite them to seek advice elsewhere.
The ownership of the property here is in the first instance an issue for local law unless that law says it is for a UK law to decide. Any charge to UK IHT is for UK fiscal law to decide. Unless the local lawyer was also proficient personally in the relevant UK law I would expect him or her to wish to seek an expert opinion on that law rather than decide what UK law said by reference to a paralegalâs research unless the paralegal was such an expert.
The difficulty here is not only a very different approach to conflict of laws, but also one of perception in that the paralegal quote is also imprecise if not inaccurate as to English land law, which differentiates between joint and several ownership, and therefore as to the English operation of survivorship over English land which is not strictly governed by a form of civil law ius accrescendi (s.23(1) LPA 1925) as it might be were it land situated in China. See prior postings on ius accrescendi over immovables and movables. Also the fact that the spouse and child are also resident in England (apparently not in China) might open up procedural and fiscal difficulties both in China and in the UK. I agree with Jack that it is better to start from the Chinese lex loci rei sitae rather than attempting to impose the English Law of Property Act abroad, Particularly trying to face down its limitation on scope at s.209(3).
As mentioned before, it is a question before a China court, and China court wonât look at the private laws of UK, so there wonât be operation of renvoi. In other words, China private law requires application of only foreign substantive laws. Thus, China court will just need tp find out under UK law, in the same fact pattern, whether the property in China registered in the deceased spouseâs name should be considered the deceasedâs separate personal assets in which the surviving spouse doesnât have any ownership interests.
my primary focus is on the question above, not about tax. But apparently, I would like to heed the tax implication on my client. I know tax is very different and a whole separate set of rules will be applied.
thanks for reminder on work ethnic. No, this is for my personal reference only. The China court will surely not rely on my research but on an expert opinion from UK.
Basically, my question on UK law is about what impact a marriage creates on properties acquired before and during marriage.
It seems to me that UK law doesnât have any law on this, leaving property ownership determination totally a matter of property law. This sounds a bit peculiar as most jurisdictions have some form of matrimonial law governing the ownership of properties acquired after marriage.
On the other hand, it has been widely known to many China mainland lawyers that in Hong Kong, properties registered in the name of one spouse often means that properties are that spouseâs personal properties. Based on this understanding, I have assumed that UK law has the same take on the issue, as Hong Kong law is just a copy of UK law.
Thanks for participating in this intelligent discussion.
At the risk of appearing to split hairs, there is no one UK succession or trust law. Each of England & Wales, Scotland and Northern Ireland has its own laws. Whilst they may be similar in some respects, they can differ significantly.
I believe that most responses have been on the basis that E&W law applies, and that may well be the case. However, going forward, I suggest you need to identify the law of which UK jurisdiction applies to the client in question.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
âAs mentioned before, it is a question before a China court, and China court wonât look at the private laws of UK, so there wonât be operation of renvoi. In other words, China private law requires application of only foreign substantive laws. Thus, China court will just need tp find out under UK law, in the same fact pattern, whether the property in China registered in the deceased spouseâs name should be considered the deceasedâs separate personal assets in which the surviving spouse doesnât have any ownership interests.â
China âwonât look at UK private lawâ but will need to find out âunder UK lawâ whether property located in China physically and registered there in the name of a deceased individual may belong to someone else. On the face of it these two statements in quotations are completely contradictory, a continuing aspect of this thread which has caused much confusion.
Because the land is in China the UK will apply the law of China to determine its ownership. If, perhaps surprisingly, for some reason possibly related to the deceasedâs personal status China law ordains that this needs to be determined under UK law (E&W, Scotland or NI) that law will include our conflicts law which will apply the law of China. UK law includes our conflicts law even although China may tell us it should not and that we should make our law like theirs because it is superior. So however much the Chinese court demands that the UK should apply its purely domestic property law to determine ownership it canât and it wonât.
The UK cannot prevent the court in China taking evidence about that purely domestic UK law and then applying it in China if that is legal there (or even if it isnât). China is perfectly entitled to apply its own law in that way and could apply any law of any other country with any notional alterations that it wished. It is not for the UK to seek to influence the China Court as to whether and what kind of UK law it chooses to apply to an issue before it (assuming a UK Court is not then asked to enforce the judgment in the UK as part of a dispute before it).
UK lawyers are regularly involved in ascertaining whether the underlying beneficial ownership of a UK property is different from its apparent legal ownership as evidenced by its being registered in a given personâs name. This task is not restricted to a case where spouses or former spouses comprise all the persons involved though that is a common case. This analysis is conducted according to well-established principles as applied to all the relevant facts. All requires detail. The UK does not have a compulsory rule compelling shared ownership between spouses even if apparently owned by only one of them but UK lawyers regularly encounter that possibility in non-UK regimes in a way UK law must recognise.
This exercise is quite different to that which may apply on a divorce or after death whereby the true ownership position once established is then changed using the UK courtâs powers derived from legislation.
A UK lawyer instructed to advise on the basis of assuming that purely UK domestic law applied as if the property was located and registered in the UK could provide an opinion on that basis if supplied with all the facts. Only the person instructing on that basis can judge whether such an opinion (theoretical only, as not representing an opinion on what English law actually was upon the actual legal subject matter) is what is needed for the purposes of the court in China to either confirm the ownership as per the registration position or disregard it in some way.
Hi Jack, i should have responded to your answer earlier.
âChina wonât look at UK private lawâ should be reworded as âChina wonât look at UK private international lawâ. This is apparently designed to avoid renvoi. I hope that will diffuse the confusion. In other words, China Law on Choice of Laws (China version of private international laws) makes it clear that China courts will apply foreign substantive laws to legal issues involved in foreign-related cases in China.
Your last paragraph is summarizing what I am trying to do. Instructing the UK lawyer to give an expert opinion on property ownership acquired and registered in the name of one spouse during their marriage as if the property were within UK.
This case has been on hold pending efforts to clear some family feuds in the way.
Again, thanks all for your contribution in this thread.